The U.S. Department of Housing and Urban Development’s last action under the Obama Administration was cutting Federal Housing Administration mortgage insurance premiums by 25 basis points.
However, HUD sent out an announcement just an hour after President Trump was sworn in, stating that the cuts were suspended indefinitely. The letter, found here, stated that the FHA will issue a subsequent Mortgagee Letter at a later date should this policy change.
Now, it seems HUD may be close to making an announcement on the policy later this month.
During the 2017 National Association of Realtors Conference and Expo, Beth Zorc, HUD acting general counsel and principal deputy general counsel, spoke about the issue, saying “HUD is continuing to look at the issue and will have additional information to share later in November and will make its decision based on the health of FHA’s Mutual Mortgage Insurance Fund.”
FHA currently charges borrowers an annual premium of 85 basis points, which NAR argues is too high to maintain affordability. NAR estimated the 25 basis point suspended reduction would have put homeownership through FHA-backed mortgages within reach for an additional 30,000 to 40,000 homebuyers.
Other measures are also in the works to make FHA mortgages more affordable and competitive. For example, a new bill, introduced in Congress by Rep. Maxine Waters, D-Calif., the ranking member on the House Financial Services Committee, could cut the life of loan policy, which requires most FHA borrowers to maintain mortgage insurance throughout their entire loan term, a change that many in the housing business have wanted for years.
“I’m grateful that HUD continues to work with Realtors on improving the landscape for homeowners and prospective buyers,” NAR President William Brown said. “Our relationship is critical to the success of consumers everywhere. Realtors look forward to working together with HUD on behalf of homeowners in the years ahead.”
